News / EU

ECB to stop Greece lending if no deal inked by March

Sunday, 01 February 2015 8:39 AM [ Last Update: Sunday, 01 February 2015 9:22 AM ]

The euro sign sculpture is pictured in front of the building that used to host the headquarters of the European Central Bank (ECB) in Frankfurt am Main, western Germany, on January 26, 2015. ©AFP)

The European Central Bank (ECB) says Greece cannot keep receiving financial aid from the institution if it fails to extend its bailout program before a February deadline.

Bank of Finland Governor Erkki Liikanen, who is also a member of the ECB’s governing council, made the remarks on Saturday nearly a month before Athens’ bailout agreement with its international creditors is due to expire.

“Greece’s program extension will expire at the end of February so some kind of solution must be found, otherwise we can’t continue lending,” Liikanen said in an interview with Finnish public broadcaster Yle.

The radical-left coalition Syriza, which recently won Greek elections, has vowed to renegotiate the terms of the cash-strapped country’s bailout with the so-called troika of the European Commission, the ECB and the International Monetary Fund (IMF).

“Significant debt restructuring has been carried out with private investors. The ECB cannot fund a state directly, which is what it would mean in this case,” Liikanen said.

Also on Saturday, German Chancellor Angela Merkel stressed that Greece should not be granted any additional debt relief.

“There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece’s debt,” she told German newspaper Hamburger Abendblatt, adding, “I do not envisage fresh debt cancellation.”

Greece’s newly-elected anti-austerity Finance Minister Yanis Varoufakis said on Friday that Athens would no longer cooperate with the troika.

In addition, Greece’s new Prime Minster Alexis Tsipras on January 28 stopped privatization plans of a number of public assets, including the port of Piraeus, the Public Power Corporation of Greece, airports and motorways. The privatization plans were agreed upon under the bailout deal.

Greece has been relying on international rescue loans since 2010. It has received 240 billion euros (330 billion dollars) in international loans. In exchange, Athens has implemented harsh austerity programs that have caused mounting dissatisfaction in the country.

The measures have forced people to endure multiple tax increases, along with cuts in pension and salary, in exchange for bailout loans by the troika.

MR/MKA/HMV

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